EUR/USD: High likelihood broad-based uptrend has reversed - JPM

FXStreet (Bali) - According to JPM FX Strategists, given the fairly impulsive structure of the decline from 1.3993 to 1.3503 in EUR/USD, there is a high likelihood that the broader up-trend has been reversed.

Key Quotes

"Given the fairly impulsive structure of the decline from 1.3993 to 1.3503 we see a high likelihood that the broader up-trend has been reversed. The final certainty for this view would however only be given on a break below 1.3497/77 (weekly trend/2014 low), which means the market has kept a backdoor open to potentially still extend it into the next major resistance zone between 1.4196 (monthly Ichimoku-lagging) and 1.4259/83 (int. 76.4 %/pivot)."

"Only a break above weekly trend line resistance at 1.4500 would constitute another scale jump in favor of another extension to massive resistance between 1.4944 (2011 high) and 1.5057/1.5147 (76.4 %/2009 high). A break below 1.3477 would on the other hand rip the downside wide open for a straight extension towards 1.3295 (pivot) and the next major support zone between 1.3104 and 1.3047 (pivot/int. 76.4 %) which look like interim targets only within a new, long-term downtrend."

"In the short-run we are looking for a range breakout between 1.3557 and 1.3671 (minor 76.4 % retracements) as such breaks would deliver an early indication whether 1.3477 (2014 low) or 1.3877 (int. 76.4 % on higher scale) will be tested next. These are the boundaries of the outer range and would have much stronger implications once taken out."

"Given the impulsive nature of the first initial decline from 1.3993 to 1.3503 though, we see a high probability that the market will fail to break decisively above 1.3877. If so we’d conclusively expect a straight test and most likely break below 1.3477 which would ultimately target 1.2897 (weekly trend) and 1.2502 (76.4 5 on big scale)."